Gulf of Mexico spill costs hit $2 billion, BP says

Oil major said to be planning $10 billion bond offering

By

SteveGelsi

NEW YORK (MarketWatch) -- BP PLC said Monday its costs arising from the continuing oil spill in the Gulf of Mexico have hit $2 billion, as the environmental disaster reached the grim 60-day mark and the oil major endured another tough day in the U.S. equities market.

BP will attempt to raise more cash to deal with the disaster through a $10 billion debt offering as early as this week, according to reports.

Meanwhile oil continues to gush from the Macondo well, ruptured since the Deepwater Horizon rig sank on April 22.

In its latest update, BP said it collected 13,400 barrels in the 12 hours ended at noon U.S. Central time from two containment systems. It collected 23,290 barrels of oil on Sunday. The total flow rate of the spill is currently estimated at about 35,000 barrels a day to 60,000 barrels a day.

Already paying for spill containment, relief well drilling, grants to Gulf Coast states, construction of sand barriers to protect coastal areas and claims from local businesses, BP also faces litigation from Anadarko Petroleum Corp.
APC, -1.71%
which owns a 25% interest in the Macondo well.

Late Friday, Anadarko set up the start of what could be a long legal battle over its possible liability in the accident, accusing BP of making "reckless" decisions leading up to the April 20 explosion. Eleven workers died aboard the rig.

And in the latest public-relations blunder for BP, Chief Executive Officer Tony Hayward returned home to the U.K. and was spotted Saturday taking part in a yacht race off the Isle of Wight.

BP Managing Director Robert Dudley is now heading up the oil major's spill containment and clean-up efforts, according to a June 4 announcement from the company, BP's chairman Carl-Henric Svanberg said in an interview last week.

Meanwhile, Hayward is on his way to Russia to assure the country's leaders that BP won't collapse, according to a report in the Financial Times. President Dmitry Medvedev speculated on the prospect of BP's demise last week.

BP said more than 65,000 claims have been submitted, and more than 32,000 payments have been made.

The oil company agreed last week to create a $20 billion fund to pay for costs associated with the spill, but it repeated Monday that it was too early to quantify other potential costs and liabilities.

While BP's financial resources have come under pressure, the establishment of the $20 billion fund last week helped it avoid even more costly exposure to the broader economic impact of the drilling moratorium in the Gulf of Mexico and more extensive coastal restoration efforts, The Wall Street Journal reported.

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